Corporate Mobile Banking? Not So Fast

Capital One research suggests security concerns are delaying many business customers' adoption of mobile for corporate banking, while there is growing interest in commercial cards and self-service capabilities.

The treasury services space continues to become more competitive as banks strive to develop profitable services and offerings that can help them differentiate. But as they seek to strengthen relationships with corporate customers, they should bear in mind that these clients are not reflexively investing in "the next big thing." They are interested in support for commercial cards activities, as well as solutions that enhance security and self-service capabilities. But mobile corporate banking? Maybe not so much.

At least, these are the trends indicated by recent research of the corporate banking market conducted by Capital One Bank. Fewer than half -- 48% -- of the finance professionals surveyed by Capital One at the recent Association for Financial Professionals (AFP) Annual Conference said their companies have plans to implement new treasury management tools and/or services this year. Those plans include implementation of corporate mobile banking for a relatively small portion -- 12% -- of the 68% of responding firms that do not already offer the service, according to Capital One.

Despite reports that corporate mobile banking is gaining momentum, adoption is not going to happen as quickly as it has on the consumer side, observes Colleen Taylor, Head of Treasury Management and Enterprise Payments, Capital One Bank. "The world of mobile we are experiencing on the consumer side will move to corporate applications, and banks are anxious to have those in place. But we have to remember the companies that will adopt these corporate implementations aren't consumers," she says. "They have to make sure their corporate policies are in place. They are concerned about security, and that is not misplaced. A mid-market company owner or corporate officer wants to make sure they have the right security in place before using mobile."

Sixty-six percent of the AFP respondents cited security challenges as the primary barrier to widespread adoption of corporate mobile banking, compared to 24% that said their firms were still figuring out their bring-your-own-device policies. Corporate treasurers' need to access information "that is inconvenient to display on a small device" was cited as a barrier by 10% of respondents.

In fact, the capabilities of tablet devices to handle and display more complex transactions are starting to persuade some corporate financial executives to overcome some of their concerns about mobile, Taylor suggests. "I think in the financial space we will see a lot of companies going directly to tablets," she says. "There's more flexibility on a tablet device. We're getting lot of questions these days, around, 'How will it work on my tablet versus how it will work on my phone?' Financial offers are not just clicking 'yes' or 'no' -- they may be approving a transaction for a wire to be released. They need data. The tablet is probably better in that environment for that level of detail."

While reservations remain around corporate mobile banking, that is not the case regarding commercial cards, according to Taylor. Fifty-nine percent of the AFP survey respondents said their company uses a commercial credit card to manage payables processing, and of the remaining 41%, 18% said they have plans to start doing so in the coming year. "Commercial cards is a space where we are seeing some advances from a technology perspective," Taylor reports. "This has to do with facilitating larger transactions," as opposed to the primarily travel-and-entertainment focus of the past. Both large and small companies are using commercial cards for functions such as procurement. Additionally, technology is enabling adoption of single-use cards.

Reflecting the mobile-related concerns about security, "there is a whole level of interested in fraud-related tools" such as positive pay, Taylor reports. "They want to have positive pay on all types of transactions."

Taylor also sees opportunities for banks to respond to corporates' growing interest in self-service. Capital One's clients are telling the bank, "'I want to transact online' -- this includes setting up the account, opening the account, and doing it in a secure way," she says. "EBAM [electronic bank account management] is taking off, and we are putting more of the banking experience into the hands of the client. This is an area where we are investing. It's good for them -- they can manage and control their accounts; and it's good for us because it is a less costly way to deliver services to customers."

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio

Yet finance execs are consumers, too -- and presumably bring those expectations of how systems and transactions should work to their jobs. That's why I would have thought the extent of mobile adoption would be farther along than the Cap One findings indicate.

Thank you for your feedback, and I agree with your analysis. I actually was a bit surprised by the Capital One findings about slower uptake on mobile corporate banking because I have heard from many people in the industry that the security concerns, while valid, can be addressed in a variety of technical and policy ways. I think it comes down to banks needing to understand what their clients want/need, and then figuring out the best ways to deliver (vs avoiding a new channel altogether).

Given the many stories currently circulating about hacking, fraud and low levels of security in relation to the mobile channel, it may seem a pipe dream to be able to use the technology in the corporate/treasury space this doesn't have to be the case. In fact a number of studies show that banking executives feel that mobile devices have a role to play in fraud reduction.

In fact it is possible to secure the mobile channel ina similar way to online banking, through a process of what is called multi-factor out-of-band authentication, and at the same time improve the overall transactional experience for users. The first step in this process is to udnerstand the risks involved, which comes back to understanding the nature of smartphones and mobile devices. When securing transactions people need to think of the mobile phone as a computer that can make phone calls, rather than a phone that is capable of handling transactions.

Mobile developers also need to play their part by building and maintaining secure mobile banking apps.

Results from a recent study reveal that 8 out of 10 mobile banking apps contain build and configuration setting weaknesses. While the issues identified are merely informational in terms of risk, they do provide insight into the state of mobile development practices among leading megabanks, regional banks, and credit unionsGă÷in short, basic security best practices are not being followed.